The proposal would create within the U.S. Treasury Department an ONI with the authority to organize, incorporate, operate, regulate, and supervise national insurers, agencies, and producers. This new office would be funded with assessment fees from the participating companies.

“This convoluted legislation would create a huge new bureaucracy that would have broad, ambiguous powers,” Jimi Grande, NAMIC’s vice president, federal and political affairs, said. “The ONI, as described in the legislation, would create multiple layers of regulation leading to confusion and higher costs for consumers.”

In addition to the ONI, the new legislation would also create a National Insurance Guaranty Corporation to protect against the insolvency of federally regulated companies. Grande pointed out that nationally chartered insurance companies would be subject to assessments from the new federal fund as well as those in any states in which a company does business.

Furthermore, the legislation would establish a systemic risk regulator for all insurance companies within 90 days of the law’s enactment. “Even though the legislation bills federal regulation as optional, the proposed systemic risk regulator would subject even those insurers who elect to remain state chartered to dual federal regulation,” Grande said.

“The property/casualty insurance industry remains competitive and solvent – there is no crisis in the insurance segment of the financial services industry that warrants the creation of an entirely new regulatory structure,” Grande said. “At a time when our economy is in crisis, it would be irresponsible to experiment with a system that continues to weather the storm.”